Which of the following is a characteristic of oligopoly. 5 Oligopoly Characteristics: Every Business's Dream 2019-02-12

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Which of the following is the basic characteristic of Oligopoly

which of the following is a characteristic of oligopoly

Thus uncertainty under oligopoly is inevitable, and as a result, the demand curve faced by each firm belonging to the group is necessarily indeterminate. The reasons for this are ultimately simple. The payoff matrix is the economic profits of the two firms and is given above, where the numbers are millions of dollars. A few examples of differentiated oligopolistic industries include automobiles, household detergents, and computers. So each seller is always on the alert and keeps a close watch over the moves of its rivals in order to have a counter-move. Indeterminate demand: The demand curve under oligopoly is indeterminate because any step taken by his rivals may change the demand curve. Barriers to entry are high.

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Solved: Which Of The Following Is Characteristic Of Oligop...

which of the following is a characteristic of oligopoly

Small businesses in an oligopolistic market fail to establish themselves as a brand because most of the market is captured by larger firms. The payoff matrix is the economic profits of the two firms and is given above, where the numbers are millions of dollars. While each firm does not have as much market control as , it definitely has more than a monopolistically competitive firm. B only one will confess. The firm has excess capacity at all output levels greater than 35 units.

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Solved: Which Of The Following Is NOT A Characteristic Of ...

which of the following is a characteristic of oligopoly

This will increase the supply and lower the price. It is easy for new firms to enter the industry. Selected Answer: The game has a Nash equilibrium in which Dr. D Dell keeps its prices high and Gateway lowers its prices. If it raises its price, and firm Y copies the price change, then firm X will not lose much market share.

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Solved: Which Of The Following Is Characteristic Of Oligop...

which of the following is a characteristic of oligopoly

In this case, an oligopolist can hope that its demand would increase substantially as the prices are lowered, ii When an oligopolist reduces his price, the other sellers also lower their prices by an equivalent amount. Nature of product: If the firms product homogeneous product, it becomes pure oligopoly. There is more than one firm in the industry. The payoff matrix is the economic profits of the two firms and is given above, where the numbers are millions of dollars. In oligopoly, however, this is not possible due to various reasons: i The firms constituting the group may not have a common goal ii The group may or may not have a formal or informal organization with accepted rules of conduct iii The group may be dominated by a leader but other firms in the group may not follow him in a uniform manner. This characteristic might seem to be a bit wishy-washy, taking both sides of product differentiation issue.

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Chapter 10: Monopolistic Competition and Oligopoly Flashcards

which of the following is a characteristic of oligopoly

Both stores would increase their profit if they cooperated in setting their prices. If you get into a price reducing war, all the companies will quickly hit the bottom of the price barrel. Check Out These Related Terms. Conflicting Attitude of Firms: Under oligopoly, two types of conflicting attitudes are found in the firms. The mutual interdependence of firms in oligopolistic industries d. The gas stations are perfectly competitive; the pharmacy is not. Barriers to Entry of Firms: As there is keen competition in an oligopolistic industry, there are no barriers to entry into or exit from it.


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Solved: Which Of The Following Is NOT A Characteristic Of ...

which of the following is a characteristic of oligopoly

What strategies will maximize their joint profit? A situation in wh … ich a particular market is controlled by a small group of firms. Each studio can release its film at Thanksgiving or at Christmas. While a new firm could enter this oligopolistic market, such a task is significantly more difficult than entering an industry with fewer barriers. In its share of the market, it controls the price and output. The downward sloping demand curve faced by firms in an oligopoly e. When one firm has a dominant position in the market the oligopoly may experience price leadership. With limited initial sales, this new firm in the market will be unable to take full advantage of decreasing short-run average cost or long-run economies of scale.

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Which of the following is the basic characteristic of Oligopoly

which of the following is a characteristic of oligopoly

For example, in a hypothetical health insurance market, out of the 20 firms doing business the top 4 firms are responsible for 65% of the total industry sales, while the figure shoots up to 80% if the top 10 firms are taken into consideration. These are some of the questions that need to be answered by the theory of group behaviour. There is no Nash equilibrium to this game. Leading firms are able to make abnormal profits in the long run, as new firms have numerous entry barriers. Examples include - computers, household products and automobiles. Changes in the prices of the products or services hardly take place in an oligopolistic market.

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Which of the following is the basic characteristic of Oligopoly

which of the following is a characteristic of oligopoly

Thus, it might be a problem in some countries. As a result of this, the demand curve facing an oligopolistic firm loses its definiteness and determinateness because it goes on constantly shifting as the rivals change their prices in reaction to price changes by a firm. This indicates that a huge percentage of the Oligopoly market is occupied by the leading commercial firms of a country. A monopolist may perhaps advertise when he has to inform the public about his introduction of a new model of his product or he may advertise in order to attract potential consumers who have not yet tried his product. Whether one considers monopoly or a competitive market, the behaviour of a firm is generally predictable. None of the answers is a threat. Answers: their best outcome given what the other person will do.

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